Local Aid Overview

Aid to cities and towns, or local aid, represents
approximately 14.6 percent of the Commonwealth’s annual budget. In FY 2014,
local aid programs account for $5.57 B, which reflects the Patrick-Murray
Administration’s unprecedented commitment to a strong partnership between the
state and its cities and towns.

Budgeted Local Aid

The Governor’s FY 2014 budget supports a total of $5.57 B in
local school aid, general government aid and program-specific aid. This
represents an increase in total funding support to the Commonwealth’s cities
and towns from FY 2013 estimated spending of $265M (5 percent). Local aid is
categorized with the programs that impact a municipality’s “Cherry Sheet,” the
vehicle used by the Commissioner of Revenue to notify municipalities and
regional school districts of estimated state aid to be paid and charges to be
assessed over the next fiscal year. Below is a summary of funding for local
aid cherry sheet accounts:

Summary of Funding for Local Aid Cherry Sheet Accounts

Account Name

FY 2013Estimated Spending

FY 2014BudgetRecommendation

Section 3 Aid

Chapter 70 Education Aid

4,171,079,892

4,397,257,302

Unrestricted General Government Aid

898,980,293

898,980,293

Annual Formula Local Aid

31,010,197

Cherry Sheet Aid

Tax Reimbursement for Vets, Blind, Widows

25,038,075

25,038,075

State Owned Land

26,270,000

26,270,000

Veterans' Benefits

42,908,484

48,327,789

Regional Library Local Aid

9,231,475

9,231,475

Municipal Libraries Local Aid

6,823,657

6,823,657

Local Share Racing Tax

1,150,000

0

Regional School Transportation

44,521,000

44,521,000

School Food Services Program

5,426,986,

5,426,986

Charter School Reimbursement

70,454,914

80,270,928

TOTAL

5,297,457,790

5,573,157,702

% Change from Prior year

5%

Level funding of State Owned Land (PILOT);

Library Aid is level is funded at the FY 2013 estimated spending
level of $16 M;

Regional School Transportation is funded at the FY 2013 estimated
spending level of $44.5 M;

Charter School Reimbursement is increased by $9.8 M from the FY
2013 estimated spending level of $70.5 M;

Tax reimbursements to veterans, the blind, and widows is funded
at $25 M;

The Department of Veterans’ Services (DVS) will maintain its FY
2013 policy of 100 percent reimbursement to cities and towns for the costs they
incur providing homeless shelter benefits to veterans – in FY 2013, the total
reimbursements to cities and towns for this service exceeded $888,000.

Section 3 of the Commonwealth’s budget provides each of the
351 cities and towns with the amount of local aid they are expected to receive
from the state General Fund and other dedicated revenue sources.

Protecting Education Reform

One of Governor Patrick’s four priorities is closing the achievement gap in our
schools, and the FY 2014 budget reflects strong support for education programs.
In FY 2014, K-12 Chapter 70 funding is allocated at $4.39 B, the highest level
of state K-12 education funding in history and a $226 M increase over FY 2013;
this investment will ensure that the reforms initiated in the 2007 Reforms to
Chapter 70 are fully implemented and funded. This increased funding will also
account for the following factors in the Chapter 70 funding allocation to local
educational authorities:

All districts are
fully funded at foundation levels;

All districts will
receive at least an increase of $25 per pupil;

Districts will
calculate Out of District Special Education at $35,000 per year, an increase of
$25,000 per year in prior years to appropriately compensate districts for the
costs of providing special education; and

Elimination of the
cap of pre-kindergarteners included in enrollment for Chapter 70.

In addition to
this $4.39 B, the special education circuit breaker will allocate $230 M
directly to municipalities.

Local Aid Reform

Unrestricted General Government Aid (UGGA) will be funded at
$899M, the same amount and same distribution provided for in the FY 2013 GAA.

An additional $31 M in local aid will be distributed to all
municipalities through the new “Annual Formula Local Aid” program. The
existing allocation of local aid among the Commonwealth’s cities and towns
(UGGA) is meant to maintain year-to-year consistency regardless of changes in a
municipality’s circumstances and is no longer based on a rational funding
formula. Annual Formula Local Aid addresses these critical aspects of a
rational local aid program:

Provides a simple
and transparent formula using a combined measure of property values and income
to calculate each municipality’s relative ability to provide essential local
services; and

Will consistently
provide equitable distributions into the future, as each year the formula
components will be updated and the total distribution of aid will be calculated
using the updated components.

The schedule on
the following pages provides the community-by-community allocation of local aid
for UGGA and Annual Formula Local Aid as well as Chapter 70 school aid to
support K-12 funding for the state’s local school districts.

Initiatives for Fiscal Year 2014

Throughout government, Governor Patrick is making innovation
to improve customer service and efficiency a priority. Consistent with that
focus, the administration has developed the following tools to assist
communities.

Incentive Aid for Local Government Performance

A new program of
incentive aid will reward municipalities for fiscal stewardship and
performance, in line with initiatives of the Patrick-Murray Administration to
change the way government does business. Incentives announced early in FY 2014
will focus on strong fiscal management, municipal health care cost reform, and
local government performance management. Municipalities will have a full year
in which to meet the incentives before incentive aid is provided for in the FY
2015 budget and distributed early in FY 2015.

One-Stop Grant Index for Municipalities

The
Administration is developing a new one-stop listing of state grant programs for
cities and towns. Municipal officials seeking opportunities for state
resources to support local initiatives will be able to find these resources
without needing to search state agency by state agency.

Citizens Connect Smart Application

CitizensConnect
is the City of Boston's award-winning effort to empower residents to be the
City's "eyes and ears." Residents can alert the City of Boston
to neighborhood issues such as potholes, damaged signs, and graffiti using a
smart phone app that identifies the location of the issue and alerts the City
of the complaint. Funded through the CIC Grant Program and led by the City of
Boston, this project adapts the Citizens Connect Smart App used by Boston into
a tool for municipalities of any size and will implement this tool in more than
30 municipalities of all sizes across the state at no initial cost as part of a
pilot program. Additional municipalities will be able to purchase the Citizens
Connect Smart App at a much-reduced price.

State Support for Municipal IT Challenges

The
Administration will partner with local governments to address various local
government information technology (IT) challenges, by leveraging existing state
resources needed by communities and sharing expertise. Activities include:

Developing a series of IT models for the benefit of local
governments, based upon successful IT-focused CIC Grant projects;

Promoting the Springfield Data Center (SDC) to municipalities;

Establishing a State-Local IT Committee to develop working
relationships and identify new opportunities; and

Developing and marketing an IT “toolkit” of services that the
state can provide to municipalities.

Geographic Information System (GIS) Services

New MassGIS
municipal planning and mapping services and online tools for municipalities
will give municipalities increased functionality and eliminate the burden on
municipalities to purchase and manage their own GIS systems.

Municipal Purchasing Assistance

The Operational Services Division (OSD) is developing
statewide contracts which specifically assist municipalities by achieving
aggregated savings on large procurements, eliminating the need for individual
bidding processes, and providing long-term, competitive contracts never before
managed on a statewide level. Identifying common needs and aggregating
purchasing power at a statewide level is becoming increasingly attractive to
our cities and towns as funding remains scarce, staffing decreases and the need
to save taxpayer dollars while obtaining the best goods and services possible
remains the goal and commitment of all communities.